Nomura upgrades India's GDP growth forecast for FY15 to 6 pct

Aug 25 2014, 16:12 IST
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India is expected to see a 5.9 per cent growth in June quarter as against its initial estimate of 4.7 per cent. India is expected to see a 5.9 per cent growth in June quarter as against its initial estimate of 4.7 per cent.
SummaryNomura revised upwards India growth forecast amid a pick-up in investment and export demand.

Global financial services major Nomura today revised upwards India's GDP growth forecast for this fiscal to 6 per cent from 5 per cent earlier amid a pick-up in private consumption, investment and export demand.

The Japanese brokerage firm has also revised the FY16 real GDP growth forecast to 6.8 per cent as against 6.5 per cent previously.

As per the report, the country is expected to see a 5.9 per cent growth in June quarter as against its initial estimate of 4.7 per cent.

The pick-up is expected to be broad-based with consumer discretionary (non-essential goods and services), exports, transportation, infrastructure and capital goods sectors surprising positively.

"We expect this momentum to be sustained as sentiment has improved and the government is resolving project constraints," the report said.

As the government "irons out" policy bottlenecks and pending investment projects materialise, other sectors should also improve, the report said.

"We expect the faster industrial recovery to have a positive spill-over impact on services sectors such as trade and transportation segments. Consequently, we are revising up our FY15 real GDP forecast to 6 per cent from 5 per cent earlier," the report said.

The country's GDP growth had bottomed out at 4.5 per cent in FY13.

"We expect the economy to fire on all cylinders in 2015-16 with a pick-up in private consumption, investment and export demand," Nomura said in a research report.

The first leg of this investment cycle is likely to be driven by the government's efforts on unclogging the investment pipeline and once the capacity utilisation rises and demand is sustained, the second leg of investment cycle is expected to take place.

"We see 2014 as the start of a multi-year growth cycle," Nomura said.

The risks to this optimistic outlook are more global than local. "The global growth slowdown, high oil prices and a sharp reversal in capital inflows are key downside risks," the report added.

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